Senate sends changes to Paycheck Protection Program to the president.
The Senate gave final approval on Wednesday to a measure that would relax the terms of the Paycheck Protection Program, a federal loan program for small businesses struggling during the pandemic.
The bill, approved overwhelmingly by the House last week, would extend to 24 weeks from eight weeks the time that small businesses would have to spend the loan money. The eight-week period to spend the loan money was set to lapse within days for some businesses, leaving the Senate limited time to consider alternatives. The measure now heads to President Trump’s desk.
The bill also would give companies greater flexibility to use the loan money on other business expenses, like utilities and rent, by lowering the amount required to be spent on payroll to 60 percent, from 75 percent.
Republicans said that they generally favored revamping the program, which was created by the $2.2 trillion stimulus bill enacted in March. But an attempt to pass the bill by unanimous consent was delayed by Senator Ron Johnson, Republican of Wisconsin, who wanted a letter clarifying that the extension applied to the time frame to spend the loan money, not to the application period. Senator Mitch McConnell of Kentucky, the majority leader, submitted the letter just after 7 p.m.
The Paycheck Protection Program aims to help small businesses continue paying their workers by giving them access to government-backed loans that will be forgiven entirely if most of the money is spent on payroll costs.
Stocks rose Wednesday, Wall Street’s fourth straight day of gains, as investors continued to zero in on prospects for the economy as they looked past other risks.
The S&P 500 climbed 1.4 percent, and stocks in Europe were sharply higher.
On Wednesday, a private report on payrolls that showed job cuts may be slowing helped lift shares in the United States. Business payrolls fell by 2.76 million last month, the ADP Research Institute said. The Bureau of Labor Statistics, or BLS, will release official May payroll figures on Friday.
“The ADP report isn’t always a reliable predictor of the BLS data, but it suggests that the pace of job loss moderated noticeably between April and May,” Daniel Silver, an economist at JPMorgan, wrote in a note to clients on Wednesday. “This is a message broadly consistent with some other related signals, and the labor market likely has benefited from the easing of restrictions on activity in many places in recent weeks.”
Companies with the most to gain as Americans begin to spend again were among the best performers. The Cheesecake Factory jumped more than 15 percent after the company said that restaurants it has reopened have recovered to about 75 percent of their sales levels from a year ago. The mall operator Simon Property Group was the best performing stock in the S&P 500.
Shares of Ford and General Motors climbed, after other automakers including Toyota reported a rise in sales from April to May. The major American auto companies now report sales on a quarterly basis.
Investors have shrugged off a number of risks — from long-term economic damage caused by the coronavirus pandemic, to rising tension between the United States and China, to growing unrest in the United States — to bid stocks higher for weeks, as they cheered steps from the Federal Reserve and fiscal spending by Washington meant to help minimize damage from the pandemic.
Since March 23, when the Federal Reserve signaled its willingness to do whatever it took to stabilize financial markets, the S&P 500 has soared nearly 40 percent. It is now less than 10 percent below its pre-pandemic high.
Quibi’s rough patch continues as top leaders take pay cuts.
The video start-up Quibi had an inauspicious debut on April 6. Now its top executives are taking pay cuts.
Quibi’s leaders, Jeffrey Katzenberg and Meg Whitman, who raised $1.75 billion to build the short-form video app, informed the staff of the salary reductions in a memo on Wednesday.
“Nothing has changed since our last company meeting two weeks ago,” they said in the memo. “Quibi is in a good financial position. As we said in that meeting, we will look for ways to tighten our belt. We are not laying off staff as a part of cost saving measures. We’ve recently added a dozen new Quibi employees.
“And in regard to tightening our belt,” they added, “our senior leadership team has volunteered to take a 10 percent pay cut because it’s the right thing to do.”
Quibi, which offers entertainment and news programs in five- to 10-minute chunks, has been downloaded 4.5 million times and has 1.6 million active users. In an interview with The New York Times last month, Mr. Katzenberg blamed the coronavirus pandemic for the slow start, saying Quibi had been designed for on-the-go viewing but came out during a nationwide lockdown.
The executive pay cuts were first reported by The Wall Street Journal.
$267 billion of economic stimulus payments are out the door, Treasury says.
The Internal Revenue Service has distributed 159 million economic stimulus payments — worth a total of $267 billion over the past two months — the Treasury Department said on Wednesday.
The stimulus money was included in the $2 trillion economic relief package Congress approved in March. The payments provide about $1,200 per adult and $500 per child, although the amounts are smaller for people with higher incomes.
The I.R.S. made 120 million payments by direct deposit, 35 million by check and 4 million by prepaid debit card, Treasury said.
The money is going to taxpayers whose information is on file with the I.R.S. and Treasury said households that have not yet received payments, such as those who do not file tax returns, can still submit their banking information and get their payments by the end of the year. Others can claim them when they file their 2020 tax returns.
The White House and members of Congress have been debating whether to provide additional stimulus payments in future economic relief legislation, but no decisions have been made.
AMC Theaters says it has ‘substantial doubt’ it can stay in business.
AMC Theaters, the largest theater operator in the world, said in a financial filing on Wednesday that “substantial doubt exists about our ability to continue as a going concern for a reasonable period of time” because of the disruption caused by the coronavirus pandemic.
Moviegoing has essentially ceased around the country, with most multiplexes closed since March and new releases from major studios delayed. All AMC theaters are closed worldwide.
“During this period, we are generating effectively no revenue,” the company said. It estimated that its net loss for the first quarter would be between $2.1 billion and $2.4 billion, compared to a $130.2 million loss in the same period last year.
In April, AMC took on $500 million in new debt, pushing its total to $5.3 billion, which it said would allow it to withstand closures around the world into November.
In its filing, it said it believed it had enough cash on hand to resume operations “this summer or later.” It cautioned that factors like not producing needed revenues even when it does open and another suspension of operations could force it to seek additional financing.
The pandemic closures came as theaters were already feeling pressured by streaming’s rising popularity. Since theaters have been shut, some studios have released new movies through video services. In April, Universal successfully rolled out “Trolls World Tour” that way and said it planned to make more movies available to home viewers — without exclusive theatrical runs — even when theaters reopen. AMC responded by saying it would no longer book any of the studio’s films.
The Fed will expand debt-buying program to include some small cities and counties.
The Federal Reserve announced on Wednesday that it will expand its municipal bond-buying program, allowing two cities or counties in each state to sell their debt to the central bank, regardless of their population.
The Fed’s program, first announced on April 9, was previously able to buy only from cities with populations of 250,000 or more and counties with populations of at least 500,000. Those larger cities and counties, along with some multistate entities, remain eligible to sell notes of up to 36 months to the central bank’s facility.
Governors of each state will also be able to designate two bond issuers whose revenues come from operating government activities — such as public transit, airports or toll facilities — to use the program.
The Fed is using its emergency lending powers, which it can tap at times of serious economic stress, to buy state and local debt as a way to keep markets functioning normally. The purchases are protected against loss by $35 billion in backing from the Treasury Department, a portion of a $454 billion pot Congress earmarked to support Fed lending programs in the $2 trillion stimulus package.
The program, which can buy up to $500 billion in municipal notes, became operational on May 26.
The Trump administration plans to block Chinese airlines from flying to the United States.
The Trump administration on Wednesday said that it planned to block Chinese airlines from flying into or out of the United States starting on June 16 after the Chinese government effectively prevented U.S. airlines from resuming service between the countries.
The dispute stems from a March 26 decision by China’s aviation regulators that limited foreign carriers to one flight per week based on the flight schedules they had in place earlier that month. But all three U.S. airlines that fly between China and the United States had stopped all service to the country by then because of the coronavirus pandemic. As a result, the Chinese government had effectively banned them from flying between the two countries. Chinese airlines, by contrast, have been flying to American cities.
Delta Air Lines and United Airlines had hoped to resume flights to China this month.
Both companies appealed to the Civil Aviation Authority of China but did not receive a response. The U.S. Transportation Department also pressed Chinese officials to allow flights by American companies during a call on May 14, arguing that China was violating a 1980 agreement that governs flights between the countries and aims to ensure that rules “equally apply to all domestic and foreign carriers” in both countries.
Canada Goose cut 20 percent of its corporate workers.
Canada Goose, the seller of $1,000 down-filled jackets, reported on Wednesday a fourth quarter sales decline of 10 percent, after cutting about 20 percent of its corporate work force last month amid the pandemic.
While the company, which is based in Toronto, said publicly that it cut just 2.5 percent of its global work force when it laid off 125 people last month, it said in internal communications obtained by The New York Times that the figure represented roughly 20 percent of corporate employees. The brand notified employees, who have been working remotely, of their terminations through brief, unexpected calls on the morning of May 20, according to five laid off workers, who spoke on the condition of anonymity to protect future job prospects.
“This is not a reflection on the brand — we are very strong globally — but rather follows what we expect from consumer behavior over the next year,” Penny Brook, chief marketing officer at Canada Goose, said in a May 20 internal email to her marketing team. “Very simply put, we expect to be a smaller organization — and we were staffed to be a larger one.”
Eurozone unemployment reaches 7.3 percent.
Joblessness in Europe ticked up slightly in April, the second month after most countries implemented coronavirus quarantines, as government-backed furlough programs designed to limit mass unemployment cushioned the blow of a devastating economic downturn.
But many national financial support programs are set to run out soon, making it likely that joblessness will continue to march higher in Europe over the coming months, economists said.
The eurozone unemployment rate rose to 7.3 percent from 7.1 percent in March, although it was down from 7.6 percent a year ago. Around 12 million people in the 19 countries that use the euro were registered as unemployed, a relatively low number compared with the United States, where more than 40 million people have filed claims for jobless benefits since the start of the pandemic.
European governments have vowed to spend trillions of euros to keep people partially employed and support businesses amid the coronavirus crisis. Since March, France, Germany, Denmark and other countries have effectively been paying businesses not to lay people off and to keep them on standby when their economies reopened. Around one-third of all employees in Europe participated in short-time work schemes at the end of April, according to a study by the European Trade Union Institute.
“As the recovery is likely going to last for quite some time, unemployment is set to rise significantly, although short-time work will help output to recover more quickly once demand returns,” Bert Colijn, the senior eurozone economist at ING bank, wrote in a note to clients.
Getting back to business may force tough choices by working women.
As the pandemic upends work and home life, women have carried an outsized share of the burden, more likely to lose a job and more likely to shoulder the load of closed schools and day care. For many working mothers, the gradual reopening of the economy won’t solve their problems, but will compound them, writes The New York Times’s Patricia Cohen and Tiffany Hsu.
If parents are called back to the workplace before day care and other support for family needs is available, they may need to limit their hours or leave the labor force altogether. And such choices are far more likely to face women than men.
Parents in the United States have nearly doubled the time they were spending on education and household tasks before the coronavirus outbreak, to 59 hours per week from 30, with mothers spending 15 hours more on average than fathers, according to a report from Boston Consulting Group.
The inequities that existed before are now “on steroids,” said Claudia Goldin, an economics professor at Harvard University. Since workplaces tend to reward hours logged, she said, women are at a further disadvantage. “As work opens up, husbands have an edge,” Ms. Goldin said, and if the husband works more, his wife is going to have to work less.
E-bikes are having their moment in the pandemic.
Electric bikes, the battery-powered two-wheelers, have become a compelling alternative for commuters who are being discouraged from taking public transportation and Ubers. For others, the bikes provide much-needed fresh air after months of confinement.
So it’s no surprise that e-bikes are now as difficult to buy as a bottle of hand sanitizer was a few weeks ago. In March, sales of e-bikes jumped 85 percent from a year earlier, according to the NPD Group, a research firm. Amazon, Walmart and Specialized are sold out of most models. Even smaller brands like Ride1Up and VanMoof have waiting lists.
“I was convinced that e-bikes would completely change cities all over the world in the next 10 years, but it seems like because of this crisis, suddenly it’s all happening in the next three or four months,” said Taco Carlier, the chief executive of VanMoof, which is based in Amsterdam.
If you are contemplating an e-bike purchase, there are trade-offs to consider, writes Brian Chen. For one, the battery packs and motors add bulk. For another, these ostentatious bikes may lure thieves.
Reporting was contributed by Emily Cochrane, Nicole Sperling, Alan Rapaport, Matt Phillips, Jeanna Smialek, Niraj Chokshi, Sapna Maheshwari, Connor Ennis, Patricia Cohen, Tiffany Hsu, Liz Alderman, Mohammed Hadi, Brian X. Chen, Kevin Williams, Neal E. Boudette, Kate Conger, Rich Barbieri and Gregory Schmidt.